How IT Projects Can Sink Companies and Careers

Are you aware of just how risky IT projects can be?  Did you know that failed IT projects can sink companies and careers?  Don’t become one of the ‘what not to do’ case studies, get professional help today to prevent a potential disaster!  Call me today on 0429 196 619 and start working with us to protect your career and to mitigate the risks inherent in IT projects.

In my experience over the last 20+ years in IT, I’ve seen that it is unfortunately all too common for IT projects to run over budget by at least 25%.  But that can be just the start of the problems.

In this month’s Harvard Business Review (HBR) magazine, there’s an article which describes why IT projects are often riskier than you think¹.   An example quoted in this article is the project to migrate of all of the IT systems of Levi Strauss into a single solution, with a project budget of $5 million. In proportion to the company’s annual revenue, that didn’t seem like a large project, so the risks were under-rated.  Unfortunately the project went off the rails very quickly, causing failure to fill orders and closure of distribution centres for a week – resulting in losses to the company of $192.5 million.  That’s a loss of revenue which equates to almost 40 times the project’s budget!  Beside the company’s losses, a career also took a hit, as the CIO resigned over this project failure.

Here’s some scary statistics from the HBR article:  67% of companies failed to terminate unsuccessful projects; 61% of managers reported major conflicts between project and line organisations; 34% of companies undertook projects that were not aligned with company strategy and 32% of companies performed redundant work because of non-harmonised projects.  Are your company’s IT projects in one of these categories?

These problems are not unique to large corporations in the USA.  There have been studies conducted in Europe, the UK, New Zealand and Australia all revealing the same pitfalls for IT projects.   For example, a study conducted by the UK Standish Group indicates that only 28% of IT projects were successful, the remainder were either abandoned, delivered late, over budget or with lower functionality than was initially envisaged².

There is good news – you can avoid these pitfalls by taking a few preventative steps.  This is where we can help you, investing in our services will help you ensure your IT projects contribute to the success of your company.  Here are some figures to get you thinking about why you should invest in IT strategic planning and professional project management…

If your company has annual revenue of $10 million and you’re planning an IT project with a budget of $100,000 – that would feel like a small risk as it’s only 1% of the annual revenue being spent.  But think about the potential impacts on your bottom line if that project goes off the rails.  In the worst case scenario of a cost over-run of 40 times the project budget, you are risking a loss of $ 4million dollars of revenue!  That’s a significant proportion of your annual revenue that would cause a cash crisis, not what anyone wants to risk in the current economic climate.  So doesn’t it make sense to mitigate your risks by investing around 10% of the project budget in professional advice?

Here’s what we can provide, if you invest in Weiser Consulting services:

1. Ensure each IT project will contribute to the overall strategic direction of your company.
2. Determine the required business and process changes before deciding on any technical changes.
3. Be technology agnostic – seek out the IT that meets your needs, rather than changing the company to suit the IT that’s put in place.
4. Set and stick to a clear scope for each IT project.
5. Implement changes in discrete steps – introducing new IT gradually to reduce risks.
6. Assemble a team of experts (both internal to the company and external consultants) and source reliable vendors.
7. Keep a close eye on the project’s progress, actively looking for emerging risks along the way.
8. Communicate constantly with key stakeholders, so there are no surprises and no nasty flow-on effects.

1.  “Why Your IT Project May Be Riskier Than You Think”, Bent Flyvbjerg and Alexander Buzier, Harvard Business Review, September 2011.  Available online at http://hbr.org/2011/09/why-your-it-project-may-be-riskier-than-you-think/ar/1.
2. “When IT Projects Fail”, New Zealand Management, March 2003, Vol. 50 Issue 2, p18, 2p.